Global regulators review Basel crypto capital rules
Global regulators are weighing changes to new capital rules for banks’ crypto exposures after a rapid rise in stablecoin payments prompted pushback that the current framework is too blunt.
Basel’s package, finalised after multi-year consultations, splits crypto into two groups and applies a 1,250% risk weight to “Group 2” assets such as Bitcoin and permissionless-chain stablecoins held on bank balance sheets. Banks read that as a de facto deterrent to holding those tokens directly. The standards were developed in late 2022 and updated in 2024.
The debate is narrow but important: how to treat regulated fiat-reserved stablecoins now used for payments, versus unbacked crypto. U.S. officials have pressed peers to review the line drawn around permissionless-network stablecoins, arguing that prudential treatment should reflect the quality and custody of the underlying reserves and the control set around issuance and redemption.
The debate is narrow but important: how to treat regulated fiat-reserved stablecoins now used for payments, versus unbacked crypto. U.S. officials have pressed peers to review the line drawn around permissionless-network stablecoins, arguing that prudential treatment should reflect the quality and custody of the underlying reserves and the control set around issuance and redemption.
In June and July, the U.S. advanced the GENIUS Act, a federal regime for payment stablecoin issuers that anchors reserves in cash and short-dated Treasuries and folds issuers into Bank Secrecy Act oversight. That legislative push has accelerated on-chain payments adoption and sharpened the question of whether bank capital rules should mirror the risk of the reserve assets when banks hold or intermediate compliant dollar stablecoins.
Europe is building a bank-specific overlay on top of MiCA. The EU’s Capital Requirements Regulation III includes a transitional prudential framework for crypto exposures, with the European Banking Authority now consulting on technical standards that, in places, allow stablecoins to follow the treatment of their backing assets if they meet strict conditions.
Singapore’s MAS has delayed its bank-capital crypto standard to 2027 to seek greater global alignment, citing industry concerns about the permissionless-DLT boundary. Hong Kong has sketched a path that could give licensed, fiat-backed stablecoins a lighter capital treatment when held or intermediated by banks under its 2026 Basel adoption, with classification guidance issued this autumn.
European and U.S. stability bodies warn that linkages between stablecoins, money funds and bank deposits need close watch as volumes rise, while standard-setters try to avoid rules that either freeze banks out or pull them in without matching risk buffers. The current review sits at that trade-off.
Regulators point out that many stablecoins maintain reserves made up largely of cash and short-term U.S. government debt to preserve their peg. The Bank of England said it continues to work on its prudential framework for cryptoasset exposures and is engaging internationally to promote consistent rules. The ECB, the Federal Reserve and the Basel Committee declined to comment to officials involved in the talks.
Europe is building a bank-specific overlay on top of MiCA. The EU’s Capital Requirements Regulation III includes a transitional prudential framework for crypto exposures, with the European Banking Authority now consulting on technical standards that, in places, allow stablecoins to follow the treatment of their backing assets if they meet strict conditions.
Singapore’s MAS has delayed its bank-capital crypto standard to 2027 to seek greater global alignment, citing industry concerns about the permissionless-DLT boundary. Hong Kong has sketched a path that could give licensed, fiat-backed stablecoins a lighter capital treatment when held or intermediated by banks under its 2026 Basel adoption, with classification guidance issued this autumn.
European and U.S. stability bodies warn that linkages between stablecoins, money funds and bank deposits need close watch as volumes rise, while standard-setters try to avoid rules that either freeze banks out or pull them in without matching risk buffers. The current review sits at that trade-off.
Regulators point out that many stablecoins maintain reserves made up largely of cash and short-term U.S. government debt to preserve their peg. The Bank of England said it continues to work on its prudential framework for cryptoasset exposures and is engaging internationally to promote consistent rules. The ECB, the Federal Reserve and the Basel Committee declined to comment to officials involved in the talks.
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
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